Is it time for partners to go global or go home?

Is it time for partners to go global or go home?

Vendors paint the picture of software-focused start-ups being global from day one, but worldwide expansion isn’t as easy as it appears

Close your eyes, spin your globe and point — where your finger lands is where you go.

That could be Argentina, Belgium or China, perhaps even Hong Kong, Israel or Japan. Maybe, Russia, South Africa or Thailand.

The possibilities — the PR and marketing departments will say — are endless, with ambition the order of the day and expansion expected from the outset.

Officially, it’s a going global from day one approach.

It’s the throwaway line heard during accelerator events, demo days and investor pitches, because being global is great and if you’re a software start-up, you must seize the day.

For the channel, carpe diem is the name of the game.

“It’s not true at all,” Tech Research Asia executive consultant Mark Iles warned. “Being global from day one is difficult and in general, it’s not true.

“You need a market entry strategy but people take the view of ‘the world is your oyster’ and the global market is open and waiting. But to be honest, if it was that easy, you would have done it already.”

Speaking from experience — in heading up local independent software vendor (ISV) Centaman Systems — Iles questioned the rhetoric that has ring-fenced the start-up industry, creating fallacies around instant global expansion through software offerings.

Iles joined the Sydney-based business in 2006 as part of the management buyout team, taking the role of CEO and equity partner alongside a private equity investor.

Operating as a market leader in enterprise software solutions for the leisure industry, Centaman helps manage everything from ticketing, membership and inventory management, to access control, business analysis and reporting.

In employing more than 40 employees, the business has offices in Sydney, Melbourne, Perth, Auckland, Chicago and Toronto, servicing over 4,500 users across over 700 sites in the USA, Canada, Australia, New Zealand, Thailand, Hong Kong, China and South Korea.

“Our obvious targets for market expansion were first the mature English speaking markets such as the USA, UK and Canada,” Iles explained. “Before going global, businesses must ensure the product is as ready as it can be for the global market.

“Some of that is writing good code and it’s not hard these days to write double-byte character sets to physically change the language of your application should you expand into non-English speaking countries.

Mark Iles - Executive Consultant, Tech Research Asia
Mark Iles - Executive Consultant, Tech Research Asia

“That’s not too hard these days but there were some gotchas to watch out for along the way.”

Specifically, the Centaman product range spans ticketing, point of sale, membership management and CRM, alongside bookings, programs management, access control, online, kiosk, mobile solutions and staff administration systems.

Through an existing customer agreement, the ISV was introduced to the South Korean market, creating both opportunities and challenges.

“We sold into the Korean market and the lunar calendar is incredibly important,” Iles said. “We work off January 1 until December 31 so it’s not something you immediately think about, but suddenly there was a requirement to stop and examine things from a lunar calendar perspective.

“It’s things like this that partners must be aware of because they can tie up significant development resources, especially in a market where sales and marketing execution is key.

“Simply turning up to a country, launching a product and having it available is not enough or isn’t considered a viable global strategy.”

Despite the difficulties associated with local markets, Iles said entering a new territory through an existing customer agreement helps provide a “soft landing” for businesses seeking global expansion.

“When a customer pulls you into a market it’s a great excuse to enter a new country through a customer that is almost funding you to go in there,” Iles said. “We had a client that had a business operating in a few countries outside of Australia and required a single system deployment across the region through a single dashboard view.

“That was beneficial to our business because we could leverage a friendly customer who could help assist with development work and setting up shop.”

In short, Iles said finding customers that can introduce new geographies offers a safer route to market than trying to acquire new business in a country that fails to recognise your brand and offerings.

“Having a current customer is great because they will share with you their local team who will quite happily help outline the requirements they are looking for in the market and you can then use that to your advantage,” Iles explained.

“From there you can decide to springboard out because supporting software and integrating it is hard with a single client.”

Global aspirations

In running all aspects of the business — including finance, product development and international expansion — Iles and the team sold the organisation in early 2010 to Constellation Software, a large publicly-listed North American software provider.

Before the sale however, the business actively pursued global expansion plans, assessing the merits of moving IP overseas in a bid to build out a worldwide footprint.

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